SEC Charges Texas School District and its Former CFO with Fraud in $20 Million Bond Sale

The Securities and Exchange Commission today charged Crosby Independent School District (Crosby ISD) and its former Chief Financial Officer, Carla Merka, with misleading investors in the sale of $20 million of municipal bonds in order to pay its outstanding construction liabilities and fund new capital projects. The SEC also charged Crosby’s auditor, Shelby Lackey, with improper professional conduct in connection with the audit of the school district’s 2017 fiscal year financial statements. The SEC’s complaint alleges that Crosby ISD, which serves approximately 6,400 students outside of Houston, failed to report $11.7 million in payroll and construction liabilities and falsely reported having $5.4 million in general fund reserves in its audited 2017 fiscal year financial statements.